Offline UPI Payments to Use NFC Tap-to-Pay

The National Payments Corporation of India is developing an offline Unified Payments Interface feature for tap-to-pay transactions at merchant point-of-sale terminals. The system is designed to work when both the customer’s mobile device and the merchant’s terminal do not have an active internet connection.

Offline Digital Payments in India

Unified Payments Interface is India’s real-time retail payment system that enables bank-to-bank transfers through mobile applications. Offline payment modes in India include UPI Lite, UPI Lite X, and the USSD-based service “99#, which works on feature phones and basic mobile networks.

Near-Field Communication and Tap-to-Pay

The new offline UPI method will use Near-Field Communication, a short-range wireless technology used for contactless payments. In this model, a user taps an NFC-enabled phone on a compatible terminal to complete a transaction without entering a UPI PIN for each payment. The proposed transaction cap for this NFC-based offline UPI payment is ₹2,000 per transaction. NPCI plans to certify point-of-sale devices from leading manufacturers during 2026 for compatibility with the new feature.

UPI Lite X and Merchant Acceptance

UPI Lite X was launched in September 2023 for offline transactions between two NFC-enabled smartphones. The new merchant-facing version extends offline functionality to point-of-sale machines used in shops, transport hubs, and other retail locations. Customers will first need to load money into their on-device UPI Lite wallet while online. They can then use the stored balance for offline payments at compatible terminals.

Important Facts for Exams

• NPCI stands for National Payments Corporation of India, which manages the UPI ecosystem in India.
• Near-Field Communication is used in contactless cards, smartphones, and payment terminals.
• UPI Lite X was introduced in September 2023 for offline phone-to-phone payments.
• The USSD service “99# is used for basic UPI functions without internet access.

Offline Use-Cases and Limits

Offline UPI systems are relevant in aircraft cabins, underground metro networks, and other low-connectivity environments. The existing USSD-based offline UPI service has a transaction limit of ₹5,000 for selected banking functions such as sending money, receiving money, and checking balances.